In a bid to tighten the regulatory structure around the corporate auditing process in the country,the disciplinary council of the Institute of Chartered Accountants of India (ICAI) ,chaired by its president Ved Jain,decided to set up a special committee today to dig deeper into the Satyam matter and determine exactly what happened and how it happened and the exact extent to which the management and the auditors were directly involved in the scam.

The committee, said Jain,will also give suggestions on the changes required in the present system of peer review and financial reporting review. Further details about the composition of the special committee will be decided following further discussion between the council tonight. The two Price Waterhouse nominees on the board did not attend the council meeting. As for their future as member of the council is concerned,Jain said there was no such compulsion on the nominees to resign from the council’s side.

Apart from this,the council also decided that the name of the auditing firm,if implicated in any fraud,will be put up on the ICAI website for five years as an alert informing corporates and other institutional bodies about the firm’s involvement in such an incident. The council,however,ruled out any interim action against Price Waterhouse,the auditors involved in the Satyam case,on the grounds that nothing has been proved against the firm yet and the due diligence has to be done before the auditors can be brought to task. The council has already issued a show cause notice to Price Waterhouse,asking for an explanation within 21 days. Apart from this,there has been no formal communication between the auditors and ICAI. As for whether there was anything on the anvil regarding compulsory rotation of auditors for companies at a regular interval,Jain said nothing of that sort had come up in the councils daylong deliberations. However,he added,if the new special committee makes such a proposal,it would be considered by the council.

The council has also recommended that the government’s recent decision to allow the board of directors of public sector banks to appoint their auditors independently should be reverted. “Looking at the present scenario,it is not appropriate that the board of directors be given such powers, said Jain.